The logos of Google, Facebook, Instagram, Twitter, Snapchat and TikTok are displayed on a computer screen.
Denis Charlet | AFP via Getty Images
The British competition watchdog doesn’t just have GIFs in mind.
Competition and Markets Authority investigation into Facebook’s acquisition of Giphy is the regulator’s latest move as it has a more prominent role in regulating big tech.
In April the agency created a new division within its ranks, the Digital Markets Unit, which was set up to provide more resources for monitoring competition in the UK digital market.
One of the first points of contact will be the creation of new codes of conduct for large companies such as Facebook, Google and Amazon.
The CMA made headlines over the past year. In the past few weeks, the Kibosh has launched the merger between Seedrs and Crowdcube, two of the UK’s largest equity crowdfunding platforms.
It looked at Amazon’s investment in Deliveroo and held the funding for months to assess the impact on food delivery in the UK. Ultimately, it approved the deal.
The new digital entity seems like a logical step for the watchdog as it prepares to curb big tech more.
Vijay Raghavan, a senior analyst at research firm Forrester, said the CMA’s stepped-up action against big tech fits into a global issue that has emerged in recent years, particularly in Europe and the US
“The way the CMA worked and some of the decisions they made regarding the Seedrs deal and the scrutiny that the Deliveroo deal received is what I think is the subject you are seeing can, in creating a level playing field, “said Raghavan.
The US and EU have been the two main players in the investigation of big tech companies in recent years, particularly with regard to the EU’s fines and sanctions against Apple and Google.
“It seems certain that the scope and power that these tech companies currently have is being explored more and more closely. The amount of data they are collecting on all of us needs to be better understood,” said Raghavan. “Here in the US there was a lot of control with the big tech companies during the elections and all of that.”
Brexit has added an important dimension to the way the CMA operates and how it operates outside the purview of Brussels.
In late March, the CMA released its annual plan recognizing the landscape it is facing. The agency said it was determined to “play a bigger role internationally to promote competition and protect consumers”.
The annual plan follows a report submitted to the UK government in November that found that competition in the country’s economy has declined over the past 20 years.
With this in mind – along with the economic challenges that Covid-19 has brought with it – the CMA is assuming a greater role in overseeing global technologies.
Stephen Whitfield, a competitor with law firm Travers Smith, said it could mean two routes in the UK and the EU on which tech companies will now have to consider two strong watchdogs if trying to get a deal across the line.
“Brexit plays a role in this. I think it may represent an opportunity for a UK regulator. In cases that would otherwise have been maintained at the European level, (a case) can now be pursued at the UK level even if they are also in Europe will be followed, “he told CNBC.
This growing number of investigations against technology companies has been monitored by the various probes launched by the European Commission. With the upcoming Digital Markets Act, Europe wants to get the reins even tighter under control.
In the meantime, the US has started to fight back against big tech more frequently, as seen recently in a series of hearings in Congress harassing bosses from Facebook, Google, Amazon, and others over competition and misinformation.
However, the Digital Markets Act has not yet been passed, and US lawmakers have not yet passed new federal laws targeting the sector.
The tide may turn, but how much more dental regulators will be open on both sides of the Atlantic, including the UK, remains to be seen.
“I think one advantage of the CMA, more to do with teeth than reach, is that it has a fairly broad or broad threshold of jurisdiction, so in some ways it can bring a whole bunch of mergers into scope that given the way their jurisdiction thresholds work, other regulators would struggle to do so, “Whitfield said.
Over the past decade, competition regulators have missed a selection of key big tech consolidation deals that have had a profound impact on the marketplace.
Whitfield points to Facebook’s acquisition of Instagram in 2012. The deal was an example of a much larger company buying a smaller company, but no one suspected how influential that smaller company would become under its new owner’s jurisdiction.
In late 2020, the FTC and some U.S. states were reviewing the Facebook-Instagram deal about eight years after it was closed.
Whitfield said merger control authorities are more aware than ever of smaller, seemingly innocuous acquisitions, but they are also in a difficult position to predict the path of a deal.
The CMA recently scrutinized Uber’s acquisition of UK company Autocab before the deal was approved. This may also be at the heart of the Giphy probe, but as more acquisitions and investments get on track, regulators will have a greater workload examining and forecasting the impact they will have on competition.
“The further you try to look into the future, and the more you try to examine potential competition, the harder it is, in some ways, to prove these theories,” said Whitfield.